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Petitioner: PAKISTAN ENGINEERING CONGRESS, LAHORE through President VS Respondent: DIRECTOR, JUDGMENT
Court Name: Lahore High Court Judge(s): Nasir Saeed Sheikh Title:PAKISTAN ENGINEERING CONGRESS, LAHORE through President vs DIRECTOR,
JUDGMENT
Reported As: 2012 PTD 1220 Result: Petition dismissed Judgment JUDGMENT NASIR SAEED SHEIKH, J.---The petitioner Pakistan Engineering Congress is a society registered under the Societies Registration Act No.XXI of 1860 and is operating since 1912 as per contents of the writ petition. The petitioner society owns property bearing No.S.XX-A-97/A-D/1 known as PEC Building, Liberty Market, Gulberg-III, Lahore. It is a matter of record and more particularly that the petitioner society has been previously paying property tax continuously till the year 2001 upon the rental income being derived from its PEC building which building is admittedly rented out in different portions to different tenants. On 18-5-2002 a demand bill of Rs.712,932 was addressed by the Excise and Taxation Authorities of Gulberg Circle-IV Lahore to the petitioner society for the recovery of property tax for the period 1-1-2002 to 30-6-2002 in respect of income being derived by the petitioner society from its PEC building. The petitioner society through its Director, Admin and Finance (Mr. A.H. Siddiqui) addressed an appeal dated 3-8-2002 to the Director, Excise and Taxation, Appeals and Inspection (Region-B) Government of the Punjab Lahore against this demand. This appeal is annexure-C and comprises three paragraphs and is reproduced:-- "Subject: APPEAL ON LEVY OF PROPERTY TAX BILL OF Rs.7,12,932 FOR THE PERIOD JANUARY TO JUNE 2002 AND SUBSEQUENT ASSESSMENT FOR 2002-2003. Dear Sir, (1) We are in receipt of the Property Tax Bill for the amount of Rs.7,12,932 pertaining to the period January, 2002 to June, 2002 in respect of property No. SXXA 97-D/I, Gulberg-Ill, Lahore. (2) In the First instance the amount of the bill is not due and justified because the property tax paid by us for the whole year 2001-2002 was for the amount of Rs.5,82,255 as shall be seen from the
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paid voucher. The present bill is for six months only for the same year and exceeds the yearly amount of the previous years billed and paid amount. Moreover, as the previous payment covers the period from January, 2002 to June 2002, therefore, the tax has already been paid for the period January 2002 to June 2002 and the present payment is either misconstrued or the result of some miscalculations which may kindly be cancelled/ annulled and the property tax may kindly be assessed according to the prevailing land based formula. The occupancy position of the property is as under:-- S. No Location Rented Area Vacant/ Common AreaSelf Occupied AreaTotal Covered Area 1 BasementNil Nil 3803 3803 2 Ground Floor2616 Avis Waljis 5000 Saudi Pak Bank 76164060 Nil 11676 3 1 Floor Nil 9645 Nil 9645 4 2 Floor 5120 AMC 3895 Shell Pak 9015587 Nil 9602 5 3 Floor 2424 Bestway cement1820 5358 9602 6 4 Floor Under-construction Nil 9602 9602 Total Area19055 16112 18763 53930
3) A copy of the approved plan is attached showing the existing and proposed area. We had completed the 2nd and 3rd Floor in 1998 but the 4th Floor has been recently started and is still under construction which can be verified at site, thus attracting no property tax. The total plot area is 29763 sft. (3307 Syd.) and the covered area self occupied and under construction and vacant/common is 34875 Sft. (16112 and 18763 Sft.) and thus the proportionate self-occupied land area comes to 2139 yards whereas the proportionate rented land area is 1168 Syd. It is requested that Judicious property tax assessment may kindly be arrived at on the basis of actual areas and under construction on ground and their utilization status, as most of the areas are self-occupied, not rented-out and the property tax has been charged over it which is unjustified being exorbitant because as per our calculation attached, herewith, the annual tax liability for this property comes only for Rs.540880." The petitioner submitted additional grounds to the said appeal vide letter dated 30-10-2002 whereby the petitioner society for the first time sought exemption from payment of property tax on the ground that the petitioner society is a charitable institution within the meaning of clause (f) of section 4 of the West Pakistan Urban Immovable Property Tax Act 1958 and is dedicated for the promotion of profession and practice of engineering. The Director, Excise and Taxation (Region-B), Lahore vide order dated 23-5-2003 decided the appeal in the following manner:--- "Mr. A.H.Siddiqui (Director Adnm. And Finance) representative of Messrs Pakistan Engineering Congress is present and has been heard in detail. He contents that the property under Appeal is a multistorey building having total area of land 3307 sq.Yards and the total covered area of the building is 53930 sq.Ft. In which only 19055 sq.Ft. Covered area is rented out and remaining 34875 sq.Ft. Covered area is in self-use/vacant. He provided floor were detail in this respect as under:-- Location Rented Area Vacant/ Common AreaSelf Occupied AreaTotal Covered Area BasementNil Nil 3803 3803st st st st
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Ground Floor2616 Avis Waljis 5000 Saudi Pak Bank 76164060 Nil 11676 1 Floor Nil 9645 Nil 9645 2 Floor 5120 AMC 3895 Shell Pak 9015587 Nil 9602 3 Floor 2424 Bestway cement1820 5358 9602 4 Floor Under-construction Nil 9602 9602 Total Area19055 16112 18763 53930
He also provided copy of approved Site Plan showing the existing and proposed area and also argued that 2nd and 3rd floor has been completed in 1998 but the 4th floor has been recently started and its still under construction which can be verified at site. He therefore, requests to reduce the assessm ent in accordance with the actual accommodation. The Excise and Taxation Inspector Incharge is also present in the court along with relevant property tax record and he submitted his report that the said property is a multistory -building in which 19055 sq.Ft. Portion is on rent and remaining 34875 sq.Ft. Portion is under self use. 4th floor is still under construction. He further reported that during survey the covered area of the property unit was recorded 56000 sq.Ft. White the appellant claims that its covered area 53930 sq.Ft. The Excise and Taxation Officer Incharge reported after spot enquiries that the total covered area is less than the mentioned as in record but no documentary evidence provided by the appellant and he proposed that the appeal may be decided on production of documentary evidence. Th.e report of Assessing Authority as well as Rana Muhammad Sabir Assistant Excise and Taxation Officer Zone-V is not comprehensive one and does not assist me to reach the conclusion. For detail comprehensive report the Assistant Excise and Taxation Officer and Excise and Taxation Inspector appeals deputed for spot verification and he submitted his report that the total covered area is 56000 sq.Ft. Out of which 12810 sq.Ft. Is in self occupied/ vacant whereas the 43190 sq.Ft. Portion is rented out to the different tenants i.e. ,on ground floor Messrs Avis Waljis Family of business, Holiday Makers, Saudi Pak Bank Ltd. At 2nd floor Messrs Shell and 3rd floor Messrs Best Way Cement. He also reported that 4th floor of the building is under construction which is near to complete. Arguments heard in detail, record perused and fresh spot report of Excise and Taxation Inspector appeals has also been seen, which is accepted to this extent and the Gross Annual Value is reduced and fixed at Rs.42,16,640 on the basis of above facts. The Assessing Authority is directed to amend the record accordingly and take up the case under section 9c(i.e) when the construction work is completed and rented out. It is certified that order containing two page has been dictated, read and signed by me." 2. The petitioner society instituted a Writ Petition No.16709 of 2003 before this Court against the levy of the property tax upon its income and also prayed for the refund of an amount .Of Rs.60,27,250 already paid by the society towards the property tax. This writ petition came up for hearing before a learned single Judge of this Court on 22-12-2003 and was disposed of with the following short order:-- "The representative of the respondent state that if petitioner makes appropriate application seeking exemption from payment -of property tax, the same shall be dealt with, considered and decided in accordance with law. The response of the learned counsel for the petitioner is that, in view of the above this petition is not pressed for the time being as the petitioner will make an appropriate application to claim exemption from payment of property tax and also to seek refund of the paid amount, which is subject matter of the present constitutional petition. He, however,st st st st
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requests that respondent/Department be bound down to expeditiously decide petitioner's application when made, in accordance with law. (2) In view of the above, this petition is disposed of as not pressed for the time being. The petitioner may make an appropriate application before the relevant authority who shall deal with and decide the same within a period of 60 days from the filing of the application. (3) Disposed of " The petitioner society then submitted an application dated 8-1-2004 before the Assessing Officer, Excise and Taxation Circle-IV, Lahore with the same prayer for seeking exemption from the levy of property tax and further for the refund of the already paid amount of property tax. The District Officer/Director, Excise and Taxation (Region-B), Lahore heard the arguments upon the said application and after noting down the respective detailed contentions of the petitioner as well as of the Excise and Taxation Officer dismissed this application while passing the following operative note in the order dated 13-3-2004:-- "I have heard in detail the arguments given by Mr. A.K.Dogar, counsel of the Engineering Congress as well as Ch. Zafar Ullah, Excise and Taxation Officer (Assessing Authority). The record produced by both the sides has been perused. Keeping in view the legal position explained by the Assessing Authority as well as the advice given by the Finance Secretary/Additional Secretary Law, the undersigned has reached this conclusion that the request of the Engineering Congress is not covered under the provisions of the Punjab Urban Immovable Property Tax Act, 1958/Rules made thereunder and as such grant of exemption is not admissible under the law." 3. The petitioner. Preferred a revision petition against the order dated 13-3-2004 (conveyed on 15- 4-2004 to the petitioner) to the Executive District Officer (Revenue) Lahore and the revision petition was dismissed vide order dated 4-3-2006. The EDO(Revenue), Lahore recorded the following observation in para-4 of the order dated 4-3-2006:-- "(4) From the perusal of record, it reveals that Pakistan Engineering Congress is not a charitable institution as it serves the only class of "Engineers" and the general public is not benefited by the objectives as given in the petition. Under section 4(d) of the Punjab Urban Immovable Property Tax Act, 1958, buildings and lands or portions thereof used exclusively for educational purposes including schools, hostels owned by Government or by a body owned or controlled by the Government are exempted from the payment of property tax. Section 4(e) is only for the public parks, playgrounds and libraries. The property of the Engineering Congress does not fall in any of these categories. The perusal of record shows that the Collector/Director passed his order after perusing the record and hearing the arguments advanced on behalf of the petitioner. He had also taken into consideration the documents presented in support of contentions of the petitioner. The Collector/Director has rightly held that Pakistan Engineering Congress does not fulfill the requirements/conditions for exemption from payment of property tax under the Property Tax Act, 1958. I find no ground to interfere. The revision petition is dismissed." 4. Through the instant Writ Petition No.2878 of 2006 the petitioner society has assailed the order dated 4-3-2006 passed by the Executive District Officer (Revenue) Lahore. 5. Para were comments were requisitioned in the matter from the respondents. 6. Through C.M. No.3 of 2011 the petitioner society sought permission to produce the evidence in respect of its charitable activities on the record of this case and a typed document has been placed on the record. Para-2 of this document prepared by the Secretary (PEC) (Engr. Akhtar Abbas Khawaja) is relevant and is reproduced:- "(2) In this connection, following information is enclosed:-- The total income of the organization for the period 2006-2007 to 2010-2011 was 2075.48 Lac. The Rental Income included therein is 1400.99 Lac. (Annexure-I), as against it, the expenditure was Rs.1003.91 Lac showing a saving of Rs.1071.59 Lac.
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Recently 10,000 Sq.Ft. Of 1st Floor and 2nd Floor of the Congress building has fallen vacant due to moving-out of Shell Pak Ltd. The year vise income/expenditure for each of the Financial Years 2006-2007 to 2010-2011 are given in Annexure-II and III. Along with this narration of facts the petitioner produced a statement of income /expenditure for the years 2006-2007 to 2010-2011 with the following facts and figures which are reproduced:-- Pakistan Engineering Congress Statement of Income/Expenditures For the FY 2006-2007 to 2010- 2011
1 Income:- (Rs.in Lac) * Rental Income * Electricity/Water/Gas * Recoveries from Lessees * Profit on Bank Deposits * Membership Fee1400.99 217.08 452.51 4.90
2075.48
2 Less:- Expenditure * Congress Website * Contribution to the PM's Flood * Relief Fund 201010.58 100.00 * Professional Activities World Water Day/World Environment Day/Lectures Symposium/Technical Visits and ICID Conferences * Scholarship for Graduate Engineering Studies * 70th Annual Session Expenses (Publications/Organizational Expenses) * Donation for Conferences/ailing Engineers * Publication for Books * Operation of Diesel Generator Due to Electricity Outage/Maintenance of Building * Financial Expenses * Other Expenses * Admn Expenses/Salaries/Electricity Charges etc.55.48
109.18
34.05
28.87 67.79
58.88 20.50 418.33 76.41
(1003.91) 3 Saving:- 1071.59
The respondents denied the claim of the petitioner society as raised in the petition that it is a charitable institution. The petitioner society submitted a rejoinder as we'll to the para were comments of the respondents.
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7. On the basis of available record the arguments of the learned counsel for the parties have been heard. 8. It is contended by the learned counsel for the petitioner that the Pakistan Engineering Congress is an Organization which has been established in the year 1912 and its objectives are specifically enumerated in the Memorandum of Association then chalked out in its Paragraphs Nos.2 and 3 which learned counsel for the petitioner highlighted and are reproduced below:-- (2) THE OBJECTIVES OF THE CONGRESS ARE: (i) To promote science, profession and practice of engineering. (ii) To afford its members opportunities for meeting periodically to discuss propagate and pursue matters of professional interest. (i.e) To have a Code of Ethics which shall govern the professional conduct of its Members. (3) The income and property of the Congress whencesoever (whensoever) derived shall be applied solely towards the promotion of the objectives of the Congress as set forth in this Memorandum of Association, and no portion thereof shall be paid or transferred or distributed directly or indirectly by way of dividend, bonus or interest or otherwise to Members of the Congress." The learned counsel for the petitioner thus stressed that whatever the rental income the Pakistan Engineering Congress-petitioner is deriving from its commercial building is being used exclusively for public charitable purposes therefore the petitioner's rental income is exempt from the levy of property tax under the provisions of Urban Immoveable Property Tax Act, 1958. The learned counsel contended that the term public charity has been specifically discussed in the well known judgment reported as FAUJI FOUNDATION AND ANOTHER V. SHAMIMUR REHMAN (PLD 1983 SC 457) at pages 673, 674 and 676. The learned counsel for the petitioner in this context specifically relied upon the following extract from the judgment from page 676:-- "As to the purport of the charitable purpose", one has to look to the definition of this term in the Act itself. In section 2 of the Charitable Endowments Act, 1890, the word "charitable purpose" is defined to include "relief of the poor education, medical relief and the advancement of any other object of general public utility..." The legal connotation of the word "charitable" is: "Having the inclination to relieve others from the burden of pain, poverty, or ignorance, and to promote the betterment of the public." (Ballentine's Law Dictionary, Third Edn., p.193). The word 'include' in the definition clause does not limit the meaning of the words "charitable purpose", but has an extending force. Accordingly, charitable purpose favourably compares in legal parlance with the word 'charitable'. All the enumerated items are without doubt purposes involving benefit to a large community of the population and in that view of the matter relatable to public purpose or public welfare. This view seems to gain support further from the use of expression "any advancement of any other object of general public utility" which necessarily connotes some beneficial advantage and service to the public. The charitable activities of the appellant about which some indication has been given earlier extends to Cottage Industries Training Centres for giving training in embroidery, knitting, cutting, sewing and carpet weaving to the wives and children of ex-servicemen, technical training of ex-any personnel and their sons in the industrial project of the appellant,' stipends for promotion of education here and abroad, pre-release Training of Army Personnel in technical projects, Hospitals and Day Health Centres for providing medical and, cash grants to Services Headquarters for the beneficial use of those serving in the armed forces, low cost housing projects for disabled ex-servicemen, manufacture of artificial limbs etc. These activities are meant to provide benefit to serving personnel including their families as well as ex-servicemen and their families, and by their nature and purport they could not otherwise but be for a "public purpose" or "public welfare" as because of the criterion of general benefit or advantage to a large segment of the population."
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The learned counsel in this context relied upon section 4(d) and (0 of the Act of 1958 to argue that the petitioner organization is working for public charitable purposes and its rental income from the commercial building in question is exempt from the levy of property tax. The learned counsel in this context has also referred to an affidavit which according to the learned counsel for the petitioner was placed before the Collector/Director Excise and Taxation, Region-B, Lahore and has been referred to in the order dated 13-3-2004 passed by him. The learned counsel further contended that the petitioner produced the necessary material before the Executive District Officer (Revenue) Lahore who has decided the revision petition against the order dated 13-3-2004 of the Director Excise and Taxation Lahore. In this context the learned counsel for the petitioner contended that the petitioner Pakistan Engineering Congress is undertaking research work for scarcity of water in Pakistan, had maintained a research library, it subscribes the funds for granting scholarships for different educational institutions and all the above mentioned facts and figures given by the petitioner Pakistan Engineering Congress before the forums below of Excise and Taxation Department, according to the learned counsel for the petitioner, conclusively established the charitable purposes for which the earning of the petitioner from its commercial property. Is being utilized. The learned counsel contended that findings of facts recorded by the forums below have a binding effect upon the High Court while deciding a writ petition and in this context the learned counsel relied upon the judgments reported as MADAN GOPAL AND 4 OTHERS V. MARAN BEPARI AND 3 OTHERS (PLD 1969 SC 617), KERAMAT ALI AND ANOTHER V. MUHAMMAD YUNUS HAJI AND OTHERS (PLD 1963 SC 191) and MUHAMMAD HUSAIN MUNIR AND OTHERS V. SIKANDAR AND OTHERS (PLD 1974 SC 139). Tile learned counsel for the petitioner in his arguments also placed reliance upon the judgments reported as PAKISTAN THROUGH THE SECRETARY, MINISTRY OF DEFENCE V. PROVINCE OF PUNJAB AND OTHERS (PLD 1975 SC 37), TRUSTEES OF PORT OF. KARACHI V. SECRETARY (EX OFFICIO) AND DIRECTOR- GENERAL, EXCISE AND TAXATION, KARACHI AND ANOTHER (1990 CLC 92), SHEIKH SULTAN TRUST V. EXCISE AND TAXATION OFFICER AND OTHERS (2006 YLR 573) and MUHAMMADI STEAMSHIP CO. LTD. V. THE COMMISSIONER OF INCOME TAX (CENTRAL), KARACHI (PLD 1966 SC 828) to highlight the concept of "Public Charity Purposes". The learned counsel for the petitioner in the end concluded that notwithstanding the previous payment of property tax by the petitioner organization, there was no estoppel against the petitioner to claim exemption from the year 2002 onwards on the ground that the petitioner-Pakistan Engineering Congress is functioning for charitable purposes and its income is exempt from the levy of property tax under the Urban Immovable Property Tax Act, 1958. The learned counsel for the petitioner also prayed that even the previous recovery of the property tax from the petitioner be ordered to be refunded to the petitioner as prayed for in the prayer clause of the writ petition. In this context the learned counsel relied upon the judgments reported as LORDS ATKIN, THANKERTON, RUSSELL OF KILLOWEN, ALNESS AND MAUGHAM, MARITIME ECLECTIC CO., LTD. V. GENERAL DAIRIES, LTD. (AIR 1937 Privy Council 114) and SHAHUL HAMID V. TAHIR ALI (1980 SCM R 596) in support of his contentions. 9. The learned Assistant Advocate General has controverted the contentions of the learned counsel for the petitioner by arguing that the petitioner-organization is admittedly owner of a multistoreyed commercial building from which it is deriving gross annual income as determined by the lower forums which part of the finding of the lower forums is not assailed or disputed by the petitioner. It is further contended that the petitioner did not produce any documentary proof of the fact that it was a charitable organization or a society as it did not get itself registered as such under the Societies Registration Act 1860. It is further argued by the learned A.A.-G. That nothing was produced by the petitioner before the lower forums to establish that the rental income of the petitioner froth the commercial building was being exclusively used for charitable purposes and in the absence of which the petitioner does not have any case for the grant of exemption. The learned A.A.-G. Contended that concurrent findings of facts have been recorded against the
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petitioner by the two forums below that the petitioner has failed to prove a case for grant of exemption from property tax before the forums below which findings of facts call for no interference as there is nothing to prove the entitlement of the petitioner to the grant of exemption as claimed for. It is further contended that the petitioner has been paying the property tax till the year 2002 without any objection and the sudden plea raised by the petitioner for seeking exemption from property tax from the year 2002 onwards is not a legally sustainable plea. It was argued by the learned A.A.-G. That one who seeks the grant of exemption from property tax has to make out a case on the basis of legally admissible proof of the entitlement for the same and the petitioner having failed to do the needful for the purpose before the lower forums, the controversial questions cannot be agitated and further resolved in the exercise of writ jurisdiction by this Court. 10. The learned A.A.-G. Also pointed out that the petitioner gave a cheque of Rs.7.4 million as directed by this Court vide order dated 27-9-2011 which cheque still remains uncashed upon the direction of the petitioner which is a mala fide act on the part of the petitioner to avoid the payment of necessary government dues since the year 2002 onwards. The A.A.-G. Contended that the petitioner then submitted a statement of its income and expenditure before this Court along with its rejoinder in which the saving of Rs.431.27 lass has been reflected for the financial years 2001-2002 to…
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